Was a thoroughbred sold at a Florida auction taxable when the seller delivered it by common carrier to the buyer in another state?

Plain-English summary

The horse sale was not subject to Florida sales tax when the seller delivered it by common carrier to the buyer outside Florida. The interstate-sale exemption depended on following the cited rule and retaining the required evidence of out-of-state delivery.

If the purchaser took possession of the horse in Florida, the sale was taxable even if the horse later left the state.

Common questions

Q: Did the buyer's presence at the auction make the sale taxable? Not by itself; delivery and possession controlled on the stated facts.

Q: What if the buyer took the horse in Florida? Florida sales tax applied.

Citations and references

• Fla. Stat. §§ 212.02(19), 212.05 — sales and use tax
• Fla. Admin. Code rr. 12A-1.064, 12A-1.066(4) — interstate and auction sales
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99A-031

Original ruling text

SUMMARY

The taxpayer sought clarification as to whether the sale of
a thoroughbred horse at auction in the State of Florida,
where the taxpayer delivers the horse to a common carrier
for delivery to the purchaser in another state, is a
taxable sale in Florida.

The Department responded by stating if the taxpayer sells
thoroughbred horses and delivery is not taken in the State
of Florida, but rather the horse is delivered outside of
Florida, then the transaction is not subject to Florida
sales and use tax, provided the provisions of Rule 12A1.064(1)(b), FA.C., are adhered to. However, if possession
of a horse is taken by the purchaser within the State of
Florida, sales tax applies to the transaction.

Jul 21, 1999

Re: Technical Assistance Advisement 99A-031
Sales and Use Tax
XXX ("your client")
Auction Sales Delivered - Out Of State
Sections 212.02(19), and 212.05, F.S.
Rule 12A-1.064(1)(a)(b),(2)(a), and 12A-1.066(4), F.A.C.

Dear :

This letter is a response to your request dated May 21,
1999, for the Department's issuance of a Technical Assistance
Advisement ("TAA") concerning the above referenced party and
matter. Your request has been carefully examined and the
Department finds it to be in compliance with the requisite
criteria set forth in Chapter 12-11, F.A.C. This response to
your request constitutes a TAA and is issued to you under the
authority of section 213.22, F.S.

FACTS PRESENTED

Your client conducts auctions of tangible personal
property, thoroughbred horses, in the State of Florida.
Although the purchaser is present at the sale, the property is
delivered by your client to a common carrier, for delivery to
the purchaser in another state.

The acknowledgment of purchase of a horse for delivery out
of state specifically states that "[t]he purchaser will take
delivery of the thoroughbred horse in State and directs [your
client] to deliver the horse to a common carrier for shipment to
State."

REQUESTED ADVISEMENT

Your client requests clarification as to whether the sale
of a thoroughbred horse at auction in the State of Florida,
where your client delivers the horse to a common carrier for
delivery to the purchaser in another state, is a taxable sale in
Florida.

APPLICABLE LAW

Section 212.05, F.S., provides it is the legislative intent
that every person is exercising a taxable privilege who engages
in the business of selling tangible personal property at retail
in this state. For exercising such a privilege, a tax is levied
on each taxable transaction or incident. The tax is due and
payable at the rate of 6 percent on the total consideration
received for each item or article of tangible personal property
when sold at retail in this state.

Section 212.02(19), F.S., defines "tangible personal property"
in part, as follows:

(19) "Tangible personal property" means and includes
personal property which may be seen, weighed, measured, or
touched or is in any manner perceptible to the senses....

Rule 12A-1.064, F.A.C., regarding sales in interstate and
foreign commerce, provides in part, as follows:

(1)(a) Sales tax is imposed on the sales price of each item
or article of tangible personal property, unless otherwise
exempt, when the property is delivered to the purchaser or
his representative in this state. However, the tax does
not apply to tangible personal property irrevocably
committed to the exportation process at the time of sale,
when such process has been continuous or unbroken.

(b) Intent of the seller and the purchaser that the
property will be exported is not sufficient to establish
the exemption; nor does delivery of the property to a point
in Florida for subsequent transportation outside Florida
necessarily constitute placing the property irrevocably in
the exportation process. Tangible personal property shall
be deemed committed to the exportation process if:

1. The dealer is required by the terms of the sale contract
   to deliver the goods outside this state using his own mode
   of transportation. The dealer must retain in his records
   trip tickets, truck log records, or other documentation
   reflecting the specific items and export destination;

2. The dealer is required by the terms of the sale contract
   to deliver the goods to a common carrier for final and
   certain movement of such property to its out of state
   destination. Sales by a Florida dealer are exempt when the
   dealer delivers the merchandise to the transportation
   terminal for shipment outside this state and secures a dock
   or warehouse receipt and a copy of the bill of lading. On
   shipments to points outside the United States, a shipper's
   export declaration shall also be obtained;

3. The dealer is required by the terms of the sale contract
   to mail the goods by United States mail for final movement
   of such property to its out of state destination; or

4. The dealer is required by the terms of the sale contract
   to deliver the goods to a licensed customs broker for
   delivery to a point outside this state. As used herein the
   term "licensed customs broker" means a person licensed by

the United States custom service to act as a custom house
broker. The dealer must retain documentation provided by
the licensed customs broker that delivery was made to a
point outside this state.

5. If a person imports goods into this state for
   exportation from this state, a use tax will be due unless
   such person can demonstrate that the tangible personal
   property was irrevocably committed to the exportation
   process at the time of importation and that the exportation
   process was continuous and unbroken while such property was
   within this state.

(c) Regardless of the documentary evidence held by the
dealer to show delivery of the property was made to a
common carrier for shipment to a point outside this state,
tax will apply if the property is diverted in transit to
the purchaser or his representative in this state, or for
any other reason it is not delivered outside this state.

(2)(a) If goods are sold within this state and possession
is taken by the purchaser within this state, the sales tax
applies, irrespective of the fact that the goods are to be
transported outside of Florida by the purchaser immediately
upon delivery, unless otherwise exempt....

Rule 12A-1.066, F.A.C., pertains to the requirements for
registration, collection and remittance of tax under the
provisions of Chapter 212, F.S., for auctioneers, agents,
brokers, and factors engaging in business in the State of
Florida.

Rule 12A-1.066(4), F.A.C., provides as follows:

(4) Every retail sale made to a person physically present
at the time of sale shall be presumed to have been
delivered in this state.

Each retail sale of taxable tangible personal property made
to a person physically present at the time of sale at an auction
is presumed to be subject to tax, pursuant to Rule 12A-1.066(4),

F.A.C. The presumption can be rebutted with documentation that
the terms of the sales transaction are in compliance with the
provisions of Rule 12A-1.064(1)(b), F.A.C.

CONCLUSION

When your client sells thoroughbred horses and delivery is
not taken in the State of Florida, but rather the horse is
delivered outside of Florida, then the transaction is not
subject to Florida sales and use tax, provided the provisions of
Rule 12A-1.064(1)(b), FA.C., are adhered to. However, if
possession of a horse is taken by the purchaser within the State
of Florida, sales tax applies to the transaction.

This response constitutes a Technical Assistance Advisement
under section 213.22, F.S., which is binding on the Department
only under the facts and circumstances described in the request
for this advice, as specified in section 213.22, F.S. Our
response is predicated upon those facts and the specific
situation summarized above. You are advised that subsequent
statutory or administrative rule changes or judicial
interpretations of the statutes or rules upon which this advice
is based may subject similar future transactions to a different
treatment from that which is expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of section 213.22,
F.S. Your name, address, and any other details that might lead
to identification of the taxpayer must be deleted by the
Department before disclosure. In an effort to protect the
confidentiality of such information, we request you notify the
undersigned in writing within 15 days of any deletions you wish
made to the request or this response.

If you have any questions, please contact me at (850) 4888026.

Kind Regards,

Alan R. Fulton

Senior Tax Specialist
Technical Assistance and Dispute Resolution

Control No. 37920